The effect of company size and voluntary disclosure on financial performance of Commercial banks in Kenya
The main objective of this study was to investigate the effects of voluntary disclosure and company size on the financial performance of commercial banks in Kenya. Specifically, this study examined general and strategic disclosure, financial disclosure, forward looking disclosure, board disclosure as a proxy for measuring voluntary disclosure and company size and how they affect the financial performance of commercial banks in Kenya. Finn performance was measured using Return on Equity (ROE). This study adopted a descriptive research design. The study took a sample of 17 out of 44 commercial banks in Kenya. The data were collected through developing a disclosure index consisting of 47 disclosure items. Secondary data were collected using documentary information from Company annual accounts for the period 2008 to 2011. Data was analyzed using a multiple linear regression model. The study found that a strong relationship exist between the voluntary disclosure, firm size and financial performance. Financial disclosure, board disclosure and forward looking disclosure was found to positively affect the financial performance while general and strategic disclosures was found to negatively affect financial performance of commercial banks in Kenya. There was a positive relationship between asset a proxy for company size and firm financial performance, This relationship is expected as firms disclose more its information asymmetry reduces which reduces cost of capital. There has been extensive research done on corporate governance in Kenya in general, however less studies have focused on areas of corporate governance. Hence more focus is needed on the areas of corporate governance in Kenya.